At a Glance
- The Federal Circuit declines to impose heightened knowledge requirement for combination trade secrets under the DTSA and MUTSA.
- A defendant need not have specific knowledge of the exact elements of a combination trade secret to be liable for trade secret misappropriation under the DTSA and MUTSA.
A May 22, 2026, decision from the United States Court of Appeals for the Federal Circuit in Versata Software, LLC v. Ford Motor Company confirms that neither the Defend Trade Secrets Act (DTSA) nor the Michigan Uniform Trade Secrets Act (MUTSA) requires a plaintiff to demonstrate that the defendant had specific knowledge of the exact combination of elements constituting a combination trade secret to be held liable for trade secret misappropriation.
Background
Versata Software, LLC, (Versata) developed two pieces of computer software for Ford Motor Company (Ford): the "automotive configuration manager" (ACM) and the "materials cost analytics" (MCA). Versata licensed its software to Ford under a master subscription and services agreement (MSSA). When the MSSA was set to expire and the parties could not agree on extension terms, Ford released its own manufacturing configuration software, called PDO, which Ford had developed while licensing Versata's software.
After PDO's release, Ford sought a declaratory judgment that, among other things, it had not misappropriated Versata's trade secrets. Versata asserted counterclaims under both the DTSA and the MUTSA, alleging Ford misappropriated three interdependent "combination" trade secrets within the ACM software — referred to as Grid, Buildability, and Workspaces — each of which performed a distinct function within the software suite. After a jury found Ford liable for trade secret misappropriation and breach of the MSSA, Ford moved for judgment as a matter of law on both liability and damages. The district court denied the motion as to liability but reduced the jury's damages award. Both parties appealed. (For a detailed discussion of the damages issue, see "Federal Circuit Allows Trade-Secret Damages That District Court Rejected."
Court's Analysis: Combination Trade Secrets
Ford's Argument
On appeal, Ford argued that Versata failed to show that Ford knew of the specific combination trade secrets at issue. Specifically, Ford argued that Versata had provided hundreds of documents containing the trade secrets but never identified the specific "bundles of features to Ford" that constituted the combination trade secret. Because Versata allegedly failed to demonstrate that Ford had specific knowledge of the ACM combination trade secrets, Ford argued that the district court's judgment on trade secret liability should be reversed.
The Court's Decision
The Federal Circuit grounded its analysis in the statutory language of the DTSA and MUTSA. Both statutes define misappropriation as the use of a trade secret by one who acquired knowledge of the trade secret by improper means or received knowledge of the trade secret under circumstances giving rise to a duty of secrecy. The court emphasized that nothing in the language of either statute requires the degree of specific knowledge of the exact combination of a trade secret that Ford urged the court to adopt. The DTSA requires knowledge that the trade secret was "acquired under circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of the trade secret," and the MUTSA imposes a materially identical standard. Accordingly, the court declined to impose a heightened knowledge requirement for combination trade secrets, consistent with the Sixth Circuit's decision in Caudill Seed & Warehouse Co. v. Jarrow Formulas, Inc., 53 F.4th 368, 385 (6th Cir. 2022), rejecting a similar argument.
Having rejected Ford's invitation to insert a heightened knowledge requirement for combination trade secrets, the court found sufficient evidence to support liability, citing testimony of Versata's technical expert and former employee that Versata disclosed the trade secrets as combinations to Ford through user guides, manuals, presentations, technical documents, emails, and the software itself.
Key Takeaways
Under the Federal Circuit's decision, a defendant may be held liable for trade secret misappropriation under the DTSA and MUTSA even without specific knowledge of each individual element of a combination trade secret. The plaintiff must still prove that the defendant acquired the trade secret under circumstances giving rise to a duty to maintain secrecy or to limit the use of the trade secret.
